The percentage of Medicare beneficiaries with drug coverage for at least one month of the year increased from 57 percent in 1992 to 69 percent in 1996.48 Within the most recent two years for which we have data, the share of beneficiaries with prescription drug coverage for at least part of the year grew from 65 percent in 1995 to 69 percent in 1996, largely because of rapid growth in Medicare HMO enrollment during 1996.

Data for more recent years are not yet available.49 However, as William Scanlon of the General Accounting Office (GAO) and Lisa Alecxih of the Lewin Group recently testified before the House Commerce Committee, there are reasons to believe that coverage rates will erode in the future, if they have not already.50

Employers are continuing to cut back retiree benefits or requiring enrollees to pay much or all of the cost. Most of the changes affect current workers retiring after a given future date, not current retirees. It is likely that fewer new beneficiaries will have access to this source of drug coverage in coming years. However, given different effective dates of changes in retiree coverage, it is difficult to predict accurately how rapidly coverage might decline.

Some Medicare HMOs have been reducing their drug benefits. If all 1999 enrollees remained in the same plans in 2000, the number with drug coverage as part of the basic package would drop from 84 percent to 82 percent. This figure does not include enrollees whose plans have terminated their contracts and who may not be able to find drug coverage elsewhere. Continuing growth in the cost of drugs may cause further reductions in drug benefits in the future. It could also increase the premiums charged for thSome Medicare HMOs have been reducing their drug benefits. If all 1999 enr

In addition to these factors that may lead to a declining rate of coverage in future years, other factors (discussed above) may make the coverage that remains less complete. There is considerable evidence that cost sharing for prescription drugs is increasing and that overall caps on coverage are both becoming more common and are being set at lower levels (especially for Medicare+Choice plans).

Multi-year data on trends in drug coverage for the non-Medicare population are not readily available. However, there is evidence that health insurance coverage generally has eroded slightly since 1996. Table 1-16 shows the proportion of noninstitutionalized civilians without Medicare receiving coverage from different sources at any time during 1996 and 1998, as measured by the March supplement to the Census Bureau’s Current Population Survey (CPS). While enrollment in employer plans increased somewhat, the gain was more than offset by a sharp decline in Medicaid participation. Over the two years, the share of the non-Medicare population with no coverage grew by nearly a percentage point.

Note: Columns sum to more than 100 percent because some people had multiple sources of coverage during the year. In 1998, use of Indian Health Service facilities is no longer treated as insurance.

Source: Institute for Health Policy Solutions analysis of March 1997 and March 1999 Supplements, Current Population Survey.51

For people with coverage, prescription drug benefits may be less generous now than in 1996. Because rising prescription drug spending has been driving overall growth in employer health plan costs (see Chapter 2), many employers are reportedly focusing on restraining the cost of drug benefits. In the last year, a reported 32 percent of employers with 500 or more workers modified drug benefit design, for example, by increasing financial incentives for participants to use generic or on-formulary drugs. Ten percent have limited coverage for some new drugs or other treatments.

Survey Disclaimer

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0990-0379. The time required to complete this information collection is estimated to average 5 minutes per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: U.S. Department of Health & Human Services, OS/OCIO/PRA, 200 Independence Ave., S.W., Suite 336-E, Washington D.C. 20201, Attention: PRA Reports Clearance Officer.